I’m not ready to argue that conducting a study is a bad idea. I’m questioning the process. It seems like the Council should be involved in a public discussion about an expenditure like this, especially one that’s likely to ruffle the feathers of local business owners. According to the Nfld News, City Administrator Joel Walinski said study was done to facilitate the conversation among local developers and hotel owners. Seems backwards to me.

47 thoughts on “On deciding to spend $9,600 for hotel market study”

Griff, I am ready to argue that conducting this study was a bad idea. The city staffers (apparently without knowledge of the city council) took tax money from Northfield taxpayers, including Hotel and Motel owners and used it to pay for a study aimed at bringing in competition for current Northfield taxpayers.

And… is there any reason to believe that the results of the $9600 study are any more accurate than one would get from consulting any random barstool pundit for the price of a beer and a bump?

Thanks, Griff, for doing that search. I, too, wondered when I read the article where that study originated. Evidently, the EDA didn’t request it, although that would be the appropriate group to do so. The expenditure of money is one issue, but the over arching one is, who is responsible for guiding the economic development in Northfield?
Even in the council discussions about the status of the Crossing, I don’t recall there being a request to explore other options for redeveloping the rest of that property. Did you do a “Crossing” search?

The essence of Curt’s remark, and Griff’s opening POST carries the essence off my recently expressed position on the EDA v staff.

Thanx for the support Griff and Curt!

To my knowledge, no one on the EDA was informed or asked (at full board meetings or in sub-committee) about this development effort. I’m the ‘lead” on the infill committee, and I only heard of this through the grapevine. I did ask Jeff Hasse (Chamber Pres at the time) at the first of two well attended Chamber of Commerce meetings, if he could comment, as I knew he had been brought into the discussion (see the News’ article) but he respectively declined to comment at that time.

I have not heard this mentioned at the Council level. I did see a disbursement figure in the Consent agenda (these are seldom reviewed [IMHO] but approved accordingly) – in this case, a disbursement to the Highland Group, some two months back.

Evidently Griff, the computer maven saw another that I missed.

As I recall, the expenditure was noted there as a figure around $4,500. Griff, can you provide a total for the two?

We (the EDA) did receive a memo marked confidential on Friday, 1/22. The article – evidently this info not leaked to the News – you could assume no leak, vis a vis the interviews contained within the News’ article … before I even opened my CONFIDENTIAL memo.

The assumption (Curt’s) that much if not all of this information might be obtained on a bar stool locally is certainly noteworthy (controversial?) and even if there was merit in a more in-depth study, I agree, it could have been brought forward by (or to) the EDA for their weighing in on, for fewer dollars – and with more discretion.

One of the EDA’s tenets is “RETENTION” … retention of local biz.

I understand competition MIGHT drive development, but in as much as this study seems to have included interviews with local hotel management, it is interesting to see the local’s voice didn’t warrant buy in, and the consultant forged ahead. It is also one thing, if a developer comes to town and says: I want to open a business (hotel/conference center) here … and another thing, if the city staff goes out and seeks to drum up business.

I can not comment on the details of the memo but there are revealing tenets there too.

It’s also interesting to ask, where did staff come up with the Highland Group. Yellow pages? Apple Valley? Rochester Mn … no, Atlanta Georgia, begging the question how deep seated was this effort. Evidently thorough some networking staff went out and sought a competent consultant. Google this group in Atlanta and you’ll see they appear to be a cottage industry operating out of their residence in the Atlanta burbs.

Well, that certainly smacks of a sense of local.

Here’s what else is related to this … that you don’t (may not) know.

Much earlier (a year plus back) John Mathern (The Crossing) came to the council during Lee Lansing’s administration, with a similar proposal, as the Crossing was moving further in to financial disarray … and looking for a way out from under their obligation to build two condo towers. Or at least, that’s my recollection.

Research gurus might probe the records to ascertain the accuracy of my memory. Since it was a work session, doubt there’s much record there!

In short, this is a primary example of staff moving forward with no authority … and this is a staff-process-symptom of overreaching … at the Council and the EDA. You might ask other boards and Commissions where they stand on staff’s oversight of their work.

You also might ask if the entire Highland Group memo from staff to the EDA is now available for public viewing. As I said, there are some interesting tenets. A least one, about use of the $9,600 dollars worth of information.

Of course, I do remember the Mendota Homes proposal to build a hotel rather than a second residential unit on the site of The Crossing. I blogged about it in the fall of 2006:https://locallygrownnorthfield.org/post/26/

To my knowledge, there was no public discussion, either at the Council or the EDA.
The EDA members received an e-mail about the study/inquiry from Jody Gunderson, I believe it was Friday afternoon, and it was indicated in the letter from the consulting company that the report from them was considered confidential and not to be used for press releases, etc.

As far as initiating the process, the City Administrator has the right to spend $$ up to ???; that amount was changed/raised , by the council, in this last year, as the previous amount was so low as to be limiting, i.e. virtually useless.

I don’t know what the purpose, as defined by the administration, of the EDA is… this seems like a perfect subject for them to pursue if they wished to do so. It also seems like a perfect subject NOT to pursue, given the comments of a local hotel expert: last year’s Chamber President, Jeff Haase.

This is an example of one of my pet peeves. Why is some outside study conducted or needed? How do you know the outside study is coming to an independent conclusion? Too many times the “consultants” (I CON you and INSULT you–I am a CONSULTANT!) come to the conclusion they are paid for–[we desperately need to find some use for this sorry empty lot-please don’t tell us we can’t get some money out of it quick.]

How about the overpaid city staff do some work that means there do not have to be a bunch of wasteful, expensive studies? Or, fire the staff and just let the consultants tell you what to do.

I don’t understand why the City would/should pay for such a study unless the City were contemplating investing or going into some sort of public-private partnership with a hotelier. I may be speaking too soon (I know nothing about the specifics, and haven’t read the Nfld News article), but I can’t see how the City would benefit from such a market feasibility study. It just doesn’t make sense. More information would be helpful.

More than one council member has said they were surprised that city staff approved a $9,600 market study considering another hotel in town. Council members knew about it before the public, but should it have been approved by the board?

Judgement and Arrogance… looking at both those words in a quantitative way, too little of one and too much of the other, create an difficult situation for a Council which does not know how to construct a working relationship between employer and employee.

There appears to be a relationship between the Highland Group consultants and the Hampton Inns chain. Here’s a press release from last April, written by Peggy Berg, one of the two principals of the Highland Group:

Atlanta, GA- Hampton Inn Atlanta Northlake announces a new way for friends and family to relax, reconnect, and get away from it all. The Stone Mountain Vacation package offers exciting deals on Stone Mountain Park tickets and shopping in the heart of Atlanta…

It seems a little weird that someone who conducts market and feasibility studies for many different hotel chains would also be doing the PR for one of them.

But it seems more weird that the City of Northfield would pay them to conduct a study in which one of their PR clients ends up being “the hotel chain most suitable for Northfield” according to the Nfld News story.

Griff, any chance you can get pdfs of the study? Is the study better than one I obtained for $1.50 by purchasing the Northfield News and reading David Henke’s story? This is the story in which the local hotel owner said the study’s projected occupancy rates were “fictitious”.

Also, how about a copy of the contract? Was the consulting group authorized to spend up to $10,000 and serendipitously came up with a total of $9600? Is there an amount that city staffers can spend without council authorization? If so, is that amount in the neighborhood of maybe $10,000?

Curt, I know that in the past the “signatory authority” at a certain staff level was $10k. I’m not sure if that’s still current.

There is probably nothing wrong procedurally (i.e., the money was in a department’s budget, and a staff person had authority to spend that amount without specific approval of the expenditure), but there’s still an enormous PR problem at the very least.

Why have ‘things’ gone so wrong?
As the council meets this evening in their goal setting session/retreat, one cannot help but think about how everywhere you go people are talking about the sequence of one mess after another, and the seeming lack of the council to deal with its process, often looking for scapegoats.

Why is this council, who set the admirable goal of openness and transparency early on in their term, apparently failing so miserably at communicating, in the spirit, and ‘letter’, of public service.

Why is the problem so apparent that the League of Women Voters, in their members planning session two weeks ago, directed their board, by a vote of over two to one, to make the issue of local govt transparency the focus of the LWV Board’s inquiry for the next year? This is not exactly an organization known for unconsidered direction.

Why do we have problems of working with our most important and immediate neighbors, the Townships?

Why are there accusations of Open Meeting Law violations… and ill advised studies (the “hotel study”) by consultants, when we have an EDA Director, a Community Development Director, and a City Administrator, all 100Kplus jobs, all of whom could have invited appropriate hotels to express an interest if there was legitimate cause to do so?

It would seem to reflect such a lack of judgement, such a lack of realistic evaluation of the struggles the existing business community is facing… such a basically out-of-touch position with the community.
Isn’t this a time to be more, not less, sensitive to the local business people ?

I must say, I look back at the open disagreements of the council during the previous administration as preferable to the constant behind the scenes pressuring and manipulation that is occurring now. A public disagreement is not nearly so troubling as an arrogant inflexibility preceding with a sense of ‘might is right’.

Sadly, Northfield is fast becoming “Peyton Place” on the Cannon.
Where is the child who cries out the truth at the parade?

Griff: I would rather that you did not move it… as it then would in my POV be disingenuous, as it is not a reaction to their goal setting session; I was not there.
The comment is in reaction to the hotel study. as another in a pile of problems.

While it is not illegal nor even unethical for the city to have requested the study, there is the question of when and how it informed the council it was doing so. At least one councilor has no recollection of discussing commissioning the report.

Two city staff members, the economic development director and the community development director both acknowledged knowing little about the report beyond that it had been commissioned. That is surprising: these two positions are key for recruiting business to the community.

When the report was released, all city councilors’ packets had a copy of it, but the public packet for the Northfield News did not.

Councilor Betsey Buckheit forwarded me this email from Joel Walinski to the Council:

From: Joel Walinski

Sent: Wednesday, January 27, 2010 8:56 AM

Subject: Re: Hotel study question

Mayor and Council Members,

Council Member Buckheit asked for information on the Hotel Study that recently has been the talk in some areas.The information is provided below.

The funding for the Hotel Study was taken out of the Admin budget 3300-Other Professional Services. In the past years the funds available in this account have been used for Hay Dobbs Facility Study, City Staffing Organizational Study, Liquor Store Options Study by the McCombs Group, and the Liquor Store Site and Selection Process by Donnelly Development. Last year, 2009, $18,000 was budgeted in this line item with a total of $10,102.21 in expenditures. For 2010, this line item was reduced by 17% to $15,000.

Regarding the authorization. There was not a specific council action on this item. On October 5, 2009 the council did have discussions on the council identified wants of the Crossing property and although there was not a specific direction given, the inferred direction provided was the council wanted staff to continue negations with Hyland Bank to resolve the Phase One development issues and look into possible solutions and alternatives for the Phase Two development, understanding that the construction on of a second residential condominium unit was not likely.

Several years earlier, there had been discussions between various partners of the Crossings Project and local hotel/motel owners about a conference center/hotel complex on that site. Moving forward we had information from the University of Mn Extension Office 2009 Market Profile which suggested a conference center/hotel as potential enhancement for downtown Northfield that could increase downtown activity, however more market analysis was needed. We had also had inquiries from two outside Hotel/Motel developers in the Fall of 2009 and previous discussions with Highland Bank and local hotel operators that this may or may not be a option, more information was needed. The next step in these conversations was the initial market study on a convention center/hotel complex. The decision to have the City fund the study would allow for any of the interested parties or general public access to the information and possibly facilitate the ongoing discussion.

The funds available in the 3300 account have been used for these types of expenditures in the past. These types and levels of efforts have been within the City Administrator’s authorization to provide direction to staff on and approve expenditures. I have also added the email I provided to the Council on October 16, 2009 regarding this item.

As a follow-up to the Crossings discussion of two weeks ago, staff has taken looked at two initiatives to address the Council’s direction of finding “alternative solutions”.

We are developing an alternative landscape plan that will provide for a more finished look to the current site at a reduced costs. Once the costs are estimated we’ll continue our discussions with all parties involved for some cost sharing participation. Th plan itself would primarily focus on finishing the landscaping along Hwy. 3, removing the construction debris and clean-up of the Phase II area, and shaping and seeding of Outlot A Park Area. This would allow for easier maintenance of the site and a more tidy look.

We have also contracted with the a market research company to perform a market study for a conference center/hotel located on the Crossing Property. The idea of a small conference center/hotel has been discussed by various stakeholders and partners concerning this location. I think the ability to collect the information and providing it to aid in the community discussion is of benefit. It is one of many steps that may need to be taken if an alternative development plan is to be identified for Phase II of the Crossings Project. The Highland representative, Mr. Mark Skinner will be in town next week. I have arrange for him to meet with several local businesses and hotel/motel owners. When the report becomes available a copy will be made available for the Council. The estimated cost for this study is ~$6500 and is available in the Administration Contracted Services line item.

If you need additional information on either of these items, please contact me.

Thank you for posting all that material, including the Walinski memos. It strikes me that Walinski makes a fair point that one benefit of the city commissioning (and paying for) the study is that the public gets to see the results. This seems a bit at odds with not promptly providing it to the newspaper or the public, but it appears that this error was rectified pretty quickly.

I did click on the link and read the study report itself. I found it unimpressive, and certainly not a justification for the city spending any money on getting the property developed as a hotel/conference center. The report was quite vague about the possible new business that such a facility could bring to the city and in fact plainly states its view that the new facility’s business would mostly be taken from existing Northfield hotels. The low occupancy rates for existing hotels make it seem very likely that these hotels can absorb additional business generated by the modest population and employment increases anticipated for Northfield. Bully for the Hampton Inn if it wants to come in and compete, but the report offers nothing to suggest that the city has an interest in putting any money toward such a project.

I come away from this thinking that a new hotel is not worth any public money but not terribly concerned about the city having spent $9,600 to analyze the issue. I do have some negative reaction to the study costing almost 50% more than Walinski’s October memo said it would, and to the possibility (raised by Griff’s comment #9 above) that the study’s authors are promoting a client (Hampton Inn). This certainly seems to call into question the authors’ independence and objectivity and I would hope that the city’s staff are investigating that point. If the people who offered to do the study did not disclose to the city in advance that they were involved with the Hampton Inn (if in fact they were), then that seems like a point important enough to pursue further.

Bob, I’m skeptical about the rationale that the city funded the study (in part) so the general public could see it. That memo was written 1/27/2010– after the public outcry.

The 10/16/2009 memo only mentions making the study available to the council.

The opinion piece from today’s Northfield News says “When the report was released, all city councilors’ packets had a copy of it, but the public packet for the Northfield News did not.” I don’t know how the News got the study.

Also, in the report, the Highland Group writes to Walinski “This summary has been prepared for your internal use and for presentation to select lenders and investors. It is restricted against inclusion in offering statements or wider distribution without our express written consent.”

Bob, like you, I was unimpressed with the report. An interesting experiment would be to have a business student replicate this study using a similar town and track the time. Is assembling a few charts, cutting and pasting stuff into a report, making a few phone calls and dreaming up some projections worth $9,583.29? (BTW, what’s the $.29 for? paperclips?) Let’s see the itemized invoice.

…and a tip of the cap to the Northfield News for exposing this story and getting the study published. I hope they continue working on this one.

Thanks Curt. So, it looks like another solid piece of journalism by Northfield’s Newspaper of Record, eh? I guess we can file this one in the same file of “Good Journalism” that also contains their recent reports on possible violations of the open meeting law – and perhaps too their reports on turmoil at the EDA.

It does sound suspiciously like there have been some talks between the city and Hampton Inn, and that this study was part of an effort to get them interested in opening a place here on our undeveloped site.

The key quotes seem to be:

“We are pleased to present this letter report summarizing our findings about the potential market for a proposed 60-unit Hampton Inn in Northfield, MN….
[O]ur projections are for a Hampton Inn which is part of the Hilton family of hotels and one of the strongest brands available…
The proposed Hampton Inn and conference center would draw in business currently not staying or meeting in Northfield…”

This firm has established ties to Hampton Inn, so clearly this study is directed toward judging the viability of that particular business at this site.

If there aren’t too many other financial strings attached to attracting such a business, such a development could be a boon to the city – and $9600 a cheap price if that business can thrive on its own in the free marketplace of competition with our existing hotels.

Alternately, if such a development required significant additional public funds, it would seem foolish to provide significant subsidies to support a private business which will compete with our existing hotels.

Patrick- I don’t think it is irregular that there may have been “talks” between Hampton Inn and the city. Now, the city paying for an economic feasibility study that would normally be paid for by the business seeking to settle here, and without any communication (supposedly) with the council, then that seems irregular.

Rick Estenson calls it a “fundamental” disagreement in the ideology of the Northfield Economic Development Authority.

Estenson, the president of the EDA, is talking about the board’s ongoing argument over the division of responsibilities between the board and the city’s economic development director, Jody Gunderson.

Some board members want to get more involved with the implementation of policy. Others believe the board should focus on crafting that policy and rely on the professional expertise of Gunderson to carry it out.

Pokorney, like Estenson and fellow board and City Council member Rhonda Pownell, believes that the appointed volunteers on the EDA board should let Gunderson concentrate on the implementation of policy.

But EDA member Victor Summa and EDA Vice President Steve Engler whole-heartedly disagree.

Because the board’s work affects businesses and individuals in the community, Engler believes the EDA should be more active in the details of policy implementation, rather than rubber stamping the work of the economic development director.

Minnesota law allows the EDA to employ an executive director, but Summa argues that Gunderson’s position, which is overseen by City Administrator Joel Walinski, not the EDA, isn’t permitted under the Minnesota statutes governing economic development authorities.

However, the state statutes don’t exclude the city from appointing a staff liaison to its EDA.

Through that position, city staff, Summa says, wield too much influence over the board, which he believes threatens the board’s transparency and impacts its decision-making process — a claim Pokorney calls “unhealthy paranoia.”

Seems like a pretty good description of the disagreement. Various commenters on the News article have offered more tabloid takes on the nature of the disagreements, but that doesn’t tend to be the purview of a traditional newspaper.

So again – looks like a good presentation of both groups’ positions on the nature of the EDA disagreement.

Patrick: You said it: “Seems like a pretty good description of the disagreement”…
But it is just that… a “description of the disagreement”… but what investigative process , by the reporter has done anything but describe the disagreement, without citing the background, specifics, and statutory language.
When the paper quotes Councilor Pokorney as saying Mr. Summa’s opinion is “unhealthy paranoia”, I would like the reporter to ask what is behind that statement…
What is one explicit and clearcut incident, or example, behind that statement is this; at the beginning of a consultant’s contract with the NW annexation property owners, a contract was being confirmed between that consultant (NOT HKgi) and the EDA. The contract was presented by the staff to be approved by the EDA Board. EXCEPT, the contract they were asked to approve was not available for them (the Board) to see. Mr. Summa noted a fiscal responsibility to public $$ and said that he was sorry to not be able to approve the contract for some tens of thousands of $$, because it had not been presented for the board to read. Mr. Pokorney asked “Don’t you trust the staff?” Mr. Summa replied that it had nothing to do with trust of staff; it had to do with a statutory responsibility for the expenditures of public dollars by a taxing authority. He was not the only no vote, as I recall.

So… when people say they don’t like a taxing authority that is supposedly not making fiscally responsible decisions, I think that comment should be based on facts rather than the desire to engage in character assassination. Should that sort of procedure go on with no one on the EDA Board objecting to the illegality of it?

As to the current EDA Director, that person is in a hard position. The EDA may have an employee, but Mr. Gunderson is not an employee of the EDA, although they pay his entire salary. He is an employee of the City of Northfield who reports to the City Administrator. But he certainly has a role with the EDA; how is he to function in a rather “fish nor fowl” (no insult intended, Mr. Gunderson, it just ‘shorthand’)… a rather ambiguous position. The very set up of his job insures adversity, and jobs, especially of that salary, are hard to come by. He cannot, by statute , and by virtue of his actual employer, be at the direction of the Board that pays his full salary.

This is already much too long, and it does not yet deal with the committee structure, the exec committee structure and Mr. Gunderson’s participation in that, and the conflicting attorney opinions (Swanson and Knutson) about the open meeting law as it relates to the committee structure.

You would need to read all the EDA statutes, their enabling resolution, the staff memo to the council regarding their enabling resolution, and their by-laws, to see all the structural problems.

If “Joey” takes a very long nap, and there is zero on the TV, and you have no medical journals to catch up on… try it!

So , Patrick..I don’t give a hoot about the staff deciding to spend $9600 on a pointlesss , IMO, study… But can I then assume from your reply to me that you think it is fine for EDA Board members, to vote to approve 10s of thousands of $$ to pay out contracts, or approve loan agreements involving 100s of thousands of $$ , the pertinent documents of which they have not seen?

Hotel study: Surprise! That’s about my only comment – staff provided little information and did not ask for formal action to undertake the study so I know just about as much about it as all of you. I hate surprises.

There does seem to be some discrepancy between Betsey’s claim on her blog of “Surprise!,” and the letter to the councilors dated Oct. 16 which informed them of this study (reproduced in post 17 above).

I don’t believe there is much discrepancy. We did receive the letter, so I should have known about the expense part (or at least $6500 of the expense). The study itself, however, was framed in terms of a more general exploration of a hotel and small conference center – an idea which has been bandied about for some years. “Highland” I took to mean “Highland Bank” which owns the Crossing now that it has been foreclosed upon, not “Highland Group” out of Atlanta and I was genuinely surprised at the content of the report which was narrowly targeted at a Hampton Inn.

The question for LG readers is – what actions do we leave to staff and what must Council approve specifically? My sense is that LG readers are more interested in more oversight. Maybe…but on the other hand, how do we set policy guidelines and then trust staff to carry them out? Could an action like this one which could be given to staff to execute assuming we’d provided enough direction?
.-= (Betsey Buckheit is a blogger. See a recent post titled January recap) =-.

Betsey, you’ve touched on one of the questions I asked Mary on the radio show – whether there are guidelines or process for staff to follow when making expenditures that are within their authority and budget (as this clearly was). Do you know if such guidelines or a process exists?

It doesn’t seem quite fair to provide carte blanche for expenditures under $10k and then hold someone’s feet to the fire when they use it. Perhaps this issue just points out the need for more specific direction or process even if the amount is under the $10k threshold in certain circumstances.

Hampton Inns is a part of Hilton Worldwide which had revenues of 7.7 billion in 2008, according to trusty internet sources. Was Hampton Inns on the brink or building a hotel here, but holding back because of the price of the study? Why did Northfield taxpayers have to foot the bill for this study?

Griff is right to question why a group that has Hampton Inns for a client was selected to do the study. The Highland Group writes that the study “summarized our findings about the potential market for a proposed 60-unit Hampton Inn”. Apparently, the study wasn’t meant to apply to anyone but Hampton Inns.

Besides the Highland Group, were other groups asked to submit a bid for this study? What parameters were listed? Was there an “up to $10,000 limit” in the RFP?

Betsey, I’m wondering about how this smells to you? Any interest in checking out the RFP (if there was one), the proposal submitted by Highland and the invoice justifying the upcharges? I don’t think that $9,600 should be considered trivial.

I don’t think this study was a good value. I don’t think the four liquor store studies were good values. I’d like to see all proposed studies go to the council for approval.

My general feeling is that the Council should give just as much direction as is needed to make things work well. When staff are making good (in your collective opinions) decisions, then I’d think that a fairly hands-off approach would generally be best. If not, then more guidance might be needed (in the areas where you’ve disagreed with their decisions) to set them on the right path.